Ford moving all small car production from US to Mexico

Ford has said it continues to invest heavily in its U.S. plants and isn't cutting jobs here. Last fall, the automaker made a commitment to invest $9 billion in U.S. plants, with about half going to 11 facilities in Michigan.

So it appears the plan is to move the small car production to Mexico to free up assembly lines to make trucks or crossovers or something else in the US. But "Ford shuffles around what factories build what, politicians wave bloody shirts because that is what they do" might not make as fun a headline.

"So it appears the plan is to move the small car production to Mexico to free up assembly lines to make trucks or crossovers or something else in the US. "

There is a 25% import tax on light trucks in the US. So economically light trucks must be made in the US. Everything else eventually move it somewhere cheap, because you can. If you do not your competitor will.

Let's say someone wanted to maintain (or even increase) auto production in the US. What would happen if they extended the chicken tax tariff to all imported cars and trucks? Sure the cost difference would show up on MSRPs, but would that be offset enough to have more decent jobs here?

What if they made a reverse chicken tax law and provided some tax incentive to auto manufactures for every vehickle exported?

How many workers actually work at an assembly plant per number of cars produced compared to 40 years ago? I'm guessing automation/robots/process improvement/etc. has significantly cut the number of workers needed per unit produced.

Not to get into politics, but this is the Trump argument. Can I as a US worker compete with 7 Mexicans for the same salary. If I can how? If not then what. Do nothing your screwed. What but protectionism is left.

In reply to qued: Trump's arguments rarely have any rational tie to politics. What you are describing and what is actually occurring are two different things (much like Trump arguments). It's not a wage issue but a capacity issue. Ford wants to free up capacity here in the states to build high-profit vehicles, they have excess capacity in Mexico they can use. Wages are not the issue here. I'll stop because I think I hear Margie's cement mixer warming up..

In reply to qued:

There is more than enough blame to go around for this happening. From the unions, to corporate management, to Wall St., to government/politicians, to all of us as the consumer masses. However, all that protectionism will do in the long run is compound the problem, because it's attacking the symptoms of the problem rather than all of the root causes of the problem. Resulting in a short term gain, but a long term loss. The alternative is to have the intestinal fortitude and self-awareness to take the more difficult, but more prosperous, path.

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In reply to 06HHR:

Considering that Ford has said themselves that this is part of a cost reduction plan, it most certainly is a wage issue. Just because we're not actively losing jobs from this move, doesn't mean we're not losing out on jobs.

Wall street journal

"Ford is scheduled to open a new $1.6 billion small-car assembly factory in San Luis Potosí in 2018 and hire 2,800 workers. People familiar with the matter say Ford will produce its Focus there, which is currently built in Michigan.

A contract reviewed by The Wall Street Journal puts factory wages at the facility at about $1.15 to $2.30 per hour, on par with what other auto-assembly plants currently pay in the region. The move to Mexico will yield cost savings of about $1,300 per vehicle, or about $300 million a year, according to manufacturing experts familiar with the Detroit car maker’s finances."

I'm old enough to remember when the US made TV, fridges , stove ect. ect. There is no law you have to make cars here. If I can make a Ford Focus in Mexico I can make a Lincoln whats the difference. I'm in Canada we have not been considered for a new car plant 10-15 years. Why would you pay me $19 when you can pay a Mexican $2.30? It's economics.

"The tract of cleared woodland lies alongside a factory Volkswagen AG set out to build in 2008. VW took an option on the adjacent 800 acres as a place where its Audi unit might build a North American plant someday.

But four years later, when Audi decided to move global production of its Q5 SUV to North America, the prize went to Mexico. Audi now is finishing a $1.3 billion factory in a gritty south-central Mexico town called San Jose Chiapa. The plant’s massive buildings rise like supertankers from dun-colored fields where families scrape by raising corn and beans.

Mexico’s low wages and improved logistics were part of the draw. But for Audi, which plans to ship the factory’s output all over the world, what tipped the scales was Mexico’s unrivaled trade relationships.

“Mexico had more than 40 different free-trade agreements,” said Rupert Stadler, Audi’s chief executive. The pacts give exporters from Mexico duty-free access to markets that contain 60% of the world’s economic output."

Audi Q5 off to Mexico

I remember reading "The World Is Flat" years ago where Freidman made a rosy prediction where we would be better off. The reality is ( and aleays was) that globalization will tend to average out wages and standards of living across the globe. The only winners are the folks at the very top and the worlds poorest. Regular folks in the US are destined to lose until we are on par standard of living wise with average workers in Mexico or India or any number of pther places.

As a Canadian I no of no other country in the world the proudly calls half thier country the "Rust Belt" and do not think they have a problem.

06HHR wrote: Ford wants to free up capacity here in the states to build high-profit vehicles, they have excess capacity in Mexico they can use. Wages are not the issue here. I'll stop because I think I hear Margie's cement mixer warming up..

Capacity is not the issue. It's not like they're going to retool an old Mexican truck plant that's sitting vacant or only running 1 shift.

"Ford is scheduled to open a new $1.6 billion small-car assembly factory in San Luis Potosí in 2018 and hire 2,800 workers."

That's why it matters. It's a $1.6Billion investment. That money goes to suppliers/contractors/electricians/concrete guys/HVAC crews, etc. etc. Everyone wants to minimize the # of jobs to assemble a car vs. years ago, but it's still a lot of humans. Plant managers. Safety engineers. Quality techs. HR people. Skilled trades/maintenance techs. etc. etc.

That's not even scratching the surface of the auxiliary impact... truck drivers bringing materials to the plant, plant suppliers and their own infrastructure, even neighboring restaurants/grocers/etc.

But we don't lose any jobs... so, that's counted as a "win" now.

qued wrote: A contract reviewed by The Wall Street Journal puts factory wages at the facility at about $1.15 to $2.30 per hour, on par with what other auto-assembly plants currently pay in the region.

I thought this is what NAFTA was supposed to stop.

I also noticed that Levi's did not drop the prices of their jeans when they sent all production to China where wages were miniscule.

The good news is that after we annex Mexico, all these cars will be made in the U.S.! Remember the Alamo!

I spot a trend "Fiat Chrysler ending car production in U.S."

USA today July 28, 2016

"Fiat Chrysler is winding down production of the Chrysler 200 and Dodge Dart and will primarily produce Jeep SUVs and Ram pickups in the U.S. The company's remaining car models will be made in Mexico, Canada or other foreign nations."

In all my time tracking auto build quality the numbers for North American countries would end up as:

• Mexico built cars best in build quality
• Canada built cars next in build quality
• USA built cars last.

I have spent time in manufacturing facilities in all three countries. It just seems that the "individual matters more" mentality of the USA doesn't lend itself to collective group manufacturing of a thing. All of the cultural focus is on "I" while in Mexico more people are in it for the team effort. Canadians seem to be in it for "Lets beat the USA".

But in this case I think there are a large list of changes driving this move.

• New panama canal has changed everything for logistics companies.
• Lag in USA and Canadian use of Rail for natural gas transportation as the oil price remains low.
• Slow down in China
• Russian manufacturing options going backwards.
• Union status and interaction.
• Cost of building a new facility not just the cars.
• And I am sure many other factors

I cant see the drug cartels not somehow eventually becoming a parasite of some sort in the billion dollar American manufacturing presence down there. Maybe they already are?

Can they move Transit Connect production to Mexico, please? This would enable the creation of a Transit Connect pickup, built in a NAFTA zone, which would avoid the Chicken Tax.

drainoil wrote: I cant see the drug cartels not somehow eventually becoming a parasite of some sort in the billion dollar American manufacturing presence down there. Maybe they already are?

Same as in the USA. I have been in the building when FBI rolls in and arrests the inside cooperators of a drug ring inside a USA manufacturing building. Used parts shipments to move the drugs. Had to halt production for a day or so.

Another situation was not FBI but State Troopers walking out several folks due to an extortion ring organized by a drug gang.

Bobzilla wrote:

Dr. Hess wrote: I dunno. I think it is better to buy American made cars, like Toyota, Honduh, BMW and Mercedes.

And Hyundai and Kia. Is it bad that the "imports" build more cars in the US than the "domestics"?

Silly argument to make, that is if you're trying to point out that foreign automakers operating in the US represent some kind of contradiction for those of us who want American automakers to stay in America. Or do you think many of us are not aware of "foreign" car manufacturers building cars here? Or maybe your just illustrating the concept of globalization? Then that's not so silly. But its not a political argument to notice the disappearance of manufacturing jobs in this country, its an observation, its a fact. Not liking this reality and wanting to do something about it is not unreasonable.